Good! You are already farther along the path than most flipping newbies.

House flipping can be fun, challenging, and profitable — but it can also be dangerous. Many people have gone bankrupt because they decided to get into house flipping.

I’ve lost money on flips that didn’t turn out the way I wanted.

It sucks.

However, like any business venture, practice makes perfect.

Ok, that’s a lie. You’ll never be perfect at house flipping. But at least “practice makes better.”

Today I want to talk about five vital tips for house flipping success that I wish I had known when I first started on my house flipping journey. Knowing these would have saved me hundreds of hours of wasted time and thousands in lost dollars.

Let’s make sure you avoid that and find incredible success on your house flipping journey.

But first…

*** Hey, you! Yes, you! If you are reading this post, you must like the idea of house flipping. If so, I want to invite you to this week’s BiggerPockets Webinar, How to Analyze a Fix and Flip Deal (And Avoid Getting Burned!). We’ll be talking about the best ways to do the math, which is tip #1 on this list! Hope you can make it! And now back to the post!)***

Okay, let’s get to the five vital tips for house flipping success

1. Understand the Math Behind House Flipping

Before the paint colors, before the new countertops, before the demolition…

There is the math.

The math is like a crystal ball, helping you see the future.

It shows you the right improvements to make.

It guides you to the best neighborhoods.

It helps you know if you will succeed or fail.

However, so many people struggle with the math. They see a dilapidated house and start thinking about all the beautiful things they could do to the house, but they don’t see the math behind it. Does it really make sense, financially? Is this house really going to provide a great profit? Should you really do this flip?

The math helps you answer those questions. The math helps you gain confidence. The math helps you avoid mistakes.

The math is not as simple as the TV shows make it seem, but it’s also not rocket science either. It’s simply a matter of knowing ALL of your expenses and subtracting them from your ultimate profit.

There are many blog posts here on BiggerPockets about analyzing a flip so I’m not going to dive deep into the topic here. Besides, I’m doing a 90-minute LIVE webinar on this very topic this week. (Can you make it? If so, click here to register.)

Also, if you are not using the BiggerPockets House Flipping Calculator… you are missing out. Seriously, it’ll save you a dozen hours a month analyzing deals!

Two major books were published in 1926 that rocked our world: Winnie-the-Pooh and The Richest Man in Babylon.

Although “stuffed with fluff,” Pooh Bear might have had a larger impact on American pop culture, but it’s The Richest Man in Babylon that has made a massive financial impact on untold millions of readers, myself included, over the past 89 years.

Written by George Samuel Clason as a collection of parables, The Richest Man in Babylon is a unique book that lacks a central storyline and a reccurring cast of characters. Instead, the book is a collection of stories about one thing: building wealth. The book seeks to answer the question: If wealthy people have the same 24 hours in a day, and work just as hard as others, how do they acquire such incredible wealth?

Can wealth creation be taught? According to Clason, yes!

In one of his parables, Clason tells the tale of Arkad, a merchant and the richest man in the city of Babylon. The king of Babylon asks Arkad to share his wisdom with 100 students in an effort to increase the collective wealth of the population.

You see, the same problem existed in ancient Babylon that existed in 1926 and still exists today: most people are broke. Clason refers to this “broke” condition as having a “lean purse.” To cure the problem of having a lean purse, Clason, through the story of Arkad, offers the following seven lessons:

1. Start thy purse to fattening.

Arkad, the richest man in Babylon, asks a very simple math question to his students: What would happen if, every day, you added 10 coins to your purse but only spent nine? The obvious answer, of course, is that wealth would increase by one coin each day.

Therefore, the first step in building great wealth is to simply set aside one coin each day. Specifically, Arkad instructs his students to set aside 10 percent of their earned income, which I think is a great place for anyone to start.

Oh, I also want a million dollars in my bank account. Oh, and while we are at it, let’s throw in an airplane, too. Grant Cardone has one, so why not?

These are all fine goals to have. And they really are goals for me.

But guess what? They are mostly worthless.

And, in fact, they might be worse than worthless.

They are dangerous.

Goal Setting Will Make You Broke and Depressed

There is one major thing getting in the way of my six-pack:

I like cake.

And cookies.

And pizza.

So every year I tell myself, this is the year I’m finally going to get my six-pack. I’m going to say no to the cake. I’m going to work out. I really want to get in shape.

But then I eat more cake.

And cookies.

And pizza.

And I don’t get that six-pack.

So I get depressed. And I eat more cake. And I get more depressed.

Now, maybe you don’t care about cake. Maybe you want something else.

Maybe this is the year you are finally going to quit your job! This is the year you are going to start your own business. This is the year you are going to buy your first rental property.

But then you eat more cake slack off.

You lose the momentum.

You can’t find a good real estate deal.

Your business partner flakes out on you.

You lose the fire.

And you get depressed.

Maybe, in an effort to accomplish those goals, you spend a bunch of “hype money.” Someone, somewhere, convinces you that the fastest or best way to achieve your goals is by purchasing some kind of product or $10,000 course or boot camp.

So you spend the money, thinking it’s going to help you.

You equate spending money with taking appropriate action.

But it doesn’t.

It just makes you broke.

And depressed.

Or let’s go back to the example of buying your first investment property. You really want to buy it. You know that buying rental properties is going to be your ticket to generational wealth for your family.

But because you are so focused on your goal of buying that property, you don’t buy the rightproperty.

You spend too much.

You didn’t run the numbers right.

You buy a bad deal.

And so you get depressed. And then you go broke.

And it’s all because you were so focused on this “goal” that you needed to hit.

Today, I want to say something a little controversial: The business you are building may be the wrong one.

Yes, I know you’ve spent hundreds or thousands of hours on it. But, I’m here to tell you that it might be the wrong business for you. As the famous quote from Stephen Covey goes, “If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster.” So, how do you know if your idea is heading up the ladder on the right wall?

Do you simply start climbing and see what happens? I don’t believe so. Not only will you be wasting years of your life that way, but you’ll wear yourself out in the process.

So, here are the three vital questions every entrepreneur should ask about the business he or she is trying to build. If you ask them of yourself, and then answer them honestly, you’ll be sure that you’re climbing the right ladder.

1. Do I want to be doing this in ten years?

Remember the first few months of your last girlfriend or boyfriend? The fun, the excitement, the giggles? This is often known as the “honeymoon phase” and it’s great but it’s not real.

What’s real is the life that comes after the honeymoon phase, when emotion is not the driving force that makes or breaks the relationship. The same is true for business ventures. Every business is exciting in the beginning, but let’s be honest: None of it is real. The feeling won’t last.

Many people start businesses because they believe they’ll become rich. And, truth be told, many businesses do make their owners wealthy. But what most wannabe entrepreneurs fail to grasp is the absurd amount of time between starting a business and exiting that business. It’s usually not six months or a year. It’s more like a decade, or longer.

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